Has the first-time buyer tax credit really worked?

This broker’s opinion is…NO. Although a number of buyers did want to take advantage of the $8K tax credit, most of the purchased homes were at the lowest levels of the market and would probably have taken place anyway. The real failure of the program is that these sales resulted in very few “trickle up” sales. Traditionally, when a seller sells their property in an entry level price bracket they take that equity and buy something else, bigger and more expensive. What has actually happened is that these sellers lost all their equity and did not buy anything. They are generally renting until they can get their finances back to a level where they can again enter the housing market. Some even had to move in with family. Nice try but we need much more help than this to precipitate a faster market rebound.

4th Qtr – Sales Might Be Up But Prices Sure Aren’t!

Consumers have recently been encouraged by reports that sales of homes have increased consistently since early summer. But don’t give your boss your retirement notice just yet! Exactly which homes HAVE been selling? I have seen sales fall into two very distinct categories. The first is the foreclosure or short-sale. These are properties the banks have acquired or will and want to quickly unload. For example, we had a buyer obtain a single-family home in decent shape in a great location for about 40% less than what the neighbors might have expected to get for theirs. …a good buy for him but not very good news for them.  The second category is distressed sales that don’t involve any banks directly. These are corporate relocations, estate sales, or divorces that require immediate resolution. These properties are often occupied and in better condition than bank-owned properties. Unfortunately, they are also selling well below the current “market” price. If you are selling a home and do not fall into either of these categories, your chances of getting a “reasonable” price for your home are probably less than 10%. Do not expect any buyer right now to pay EXTRA for good decorating, a better view, or a finished basement. Unless you are prepared to be very aggressive on price, you might as well saty put for now.  Do not despair. Things could change quickly by spring IF employment rebounds and forelcosures stabilize. There are many buyers out there waiting for the right time to buy and when they can, inventories of available homes will return to a more favorable balance.